Energy firms call on TVA to open grid to more solar

Moments after the application process opened, space had run out.

In the early morning hours of Aug. 1, emails flooded into the Tennessee Valley Authority's computers from homeowners and companies vying for a spot in the federal agency's small-scale solar energy program.

Moments after the application process opened at 7 a.m., space had run out, and it was back to a waiting game for the hundreds of applicants who didn't make it in.

"They keep dangling this carrot in front of you, and then they take it away," said Darren Metz, CEO of Novacopy, a Nashville-based distributor of commercial printers and copiers that wants to get into the program.

He would like to install solar power generating panels at several sites across the state, Metz said, but TVA "gives you an uncertain economic picture of whether it's cost-justifiable to do it."

The federal agency's small-scale solar program, launched about a decade ago as a way to jump-start the budding solar industry in Tennessee, allows solar power generators to connect to the electrical grid and sell the power they generate to TVA at a rate higher than the market price.

But now conservation groups and solar power firms say the program is stifling the solar industry in Tennessee. Each year, the federal agency sets a cap on the amount of power it will buy, which those groups say is far below demand.

“Capacity is being snapped up, and people are clamoring for the program.”

"Capacity is being snapped up, and people are clamoring for the program," said Nathan Moore, senior attorney in Nashville for the Southern Environmental Law Center, which follows the industry closely. "The problem is as these programs close, what we're seeing is the market being artificially constrained."

When TVA opened its Green Power Providers program last month to fill a small amount of capacity, it received 343 applications but was able to accept only 116, the agency reported.

Cap on purchases

The stop-start nature of the program is what solar advocates say makes it hard for solar installers, companies and homeowners to plan their solar projects. They say that uncertainty jeopardizes the long-term health of the industry. Beyond that, the advocates say there should be an easy way to connect to the grid outside of the incentive program.

"This type of management is crippling the industry," said Steve Johnson, who runs Antioch-based solar panel installation firm LightWave Solar. "We don't have any way of planning."

The agency has about 1,700 solar installations participating in the program, and an additional 244 are in the works.

At the beginning of this year, the agency set the amount of energy it would buy through the small-scale solar program at 7.5 megawatts, or enough energy to power hundreds of homes.

Part of the reason TVA caps the amount of solar energy it buys is to keep overall energy costs down for its customers, Scott Brooks, a spokesman for the federal agency, said in an email.

"TVA must carefully balance competing interests when buying renewable energy at prices above other generation sources because this cost difference is passed on to 9 million power consumers," Brooks said. "No matter what we do, we still have to answer to the ratepayers."

But Moore said the $25 million TVA spends on the premium is small compared to the federal agency's overall budget.

"We would like to see TVA fund this program in a way that's consistent with their vision to be a renewable energy leader in the Southeast," Moore said.

Another problem, Moore said, is that program represents the only easy way for small-scale solar generators to connect to the power grid. The process for companies that want to proceed outside of the incentive program is murky and requires more hurdles, he said.

"It is effectively so onerous and the payback period is so long that there's no economical way to do it," Moore said. "I do think we need some sort of system that makes it possible for new customers to hook up (solar panels), even if they're going to do it at their own expense."

Part of the reason TVA doesn't promote connecting to the grid outside of the premium program is that few companies would find that economically feasible, Brooks said.

"TVA and local power companies have received little interest from people wishing to install solar panels, unless TVA purchases the energy at prices that help offset the investment in the technology," Brooks said.

Solar plans on hold

For Metz, of Novacopy, getting accepted into TVA's small-scale program would make it economically viable for his firm to install solar panels at four sites.

However, even without the incentive, Metz would want to install solar panels at a new site he's building in Memphis.

"Without those subsidies, you can justify solar, but it gets kind of skinny," he said. "With new construction, you could definitely justify it. The economics are a lot better for new construction."

When starting from scratch on a building, the cost of the solar panels can be financed along with the rest of the building materials, Metz said. Additionally, other tax incentives offered by local municipalities can often offset the cost, he said.

TVA plans to open the program for the next round of applications in January. Until then, Metz is putting his solar plans on hold in hopes that one of his projects will be approved.